As the global financial woes show little sign of abating, the tax authorities in many countries are working harder than ever before to identify undeclared taxable income and gains and following up many different sources of information, regardless of the source and how it came into their possession!
In 2008, an ex HSBC employee released sensitive information about Swiss bank accounts to the authorities and if you thought that was an isolated incidence, think again, as it has happened more recently too. This time, allegedly, a whistle blower has been at work from HSBC again but this time in regard to offshore bank accounts in Jersey.
Add to this the increasing number of information sharing activities which are going on between authorities, financial institutions and even utility companies, data is stacking up and being used to identify tax dodgers wherever they may be.
So the answer to my question really depends on whether you have been declaring all of your income for tax or have been hiding under the radar as so many people have tried to do over the years in Spain.
It is only a personal view, but I think those days are largely behind us when it was unlikely that tax dodgers would be found out as time goes by, quite the reverse will become the norm and Big Brother is indeed watching!
As always, if you want to sleep at night, then to declare what you should for tax purposes has to be the right way forwards and if in the past you have not done so, then it is far better for you to put your hands up now and take some advice rather than holding your breath in case your file is the next one to be scrutinized and waiting to be found out.
Actually, it is not just about declaring amounts that should be taxed. Whilst that is necessary, what you should be doing first, is making sure that your money is held in the right places to ensure that you are not paying more tax than you should. Having minimized the liability, it is a lot less painful to declare what is due and to pay up!
Sensible tax planning is not just the domain of the mega wealthy but can be very effective at all levels where you have capital invested.
Some very tax efficient investment programs are available which are fully compliant in both the UK and Spain and can be employed with as little capital as 25,000 Euros or £25,000, depending on your currency of choice and unlike deposit accounts, you wont pay tax on all of the growth or income that you earn.
Financial planning can take many different forms and it is true to say that it is not an exact science but that is one of the best things about it as you really can be treated like an individual rather than simply accepting a stuffy old deposit account which is delivered on a one size fits all basis and all interest is taxable!